CAMBRIDGE, Mass.--(BUSINESS WIRE)--Many institutional investors, particularly corporate pensions and 501(c)
tax-exempt organizations, are forecasting substantial increases in their
allocation to passively managed investments over the next three years.
While the majority of institutional assets are currently actively
managed, the shift anticipated by corporate pensions and tax-exempt
institutions, which collectively represent nearly half (49%) of all
institutions, could dramatically affect the market share of the leading
institutional asset managers. These and other findings are included in
the annual US
Institutional Investor Brandscape®,
a Cogent
Reports™ study by Market
Strategies International.

According to the report, 39% of corporate pensions and 11% of tax-exempt
institutions plan to decrease their holdings in actively managed US
public equities over the next few years. In addition, 11% of tax-exempt
institutions report a desire to reduce their active US fixed income
allocations. Corporate pensions anticipate an increase in allocation to
US fixed income, both active and passive, while tax-exempt institutions
show more interest in passively managed equity strategies in the US and
international markets.

“While the potential shift away from active management should be enough
to sound the alarm for institutional asset managers, it is more
important for these firms to understand the drivers of these changes
from the customer’s perspective,” says Linda York, vice president and
lead author of the study. “Corporate pensions are increasingly focused
on de-risking their portfolios and are citing concerns about fees as
their main reason for seeking passive investments. In contrast,
tax-exempt institutions are much more likely to be questioning the value
that active management provides, and are showing some skepticism that
active management is worth the price and delivering performance over and
above that which passive management offers.”

The study asked institutional investors to identify the primary drivers
for their anticipated increases to passive management. One-third of all
pensions, including 29% of corporate pensions, rate costs and fees as
their top contributing factor, compared with just 6% of tax-exempt
institutions. The question of active management not performing or not
worth the price is cited by more than one-quarter of non-profits,
compared with just 8% of corporate pensions.

“The impact on institutional asset managers is clear,” continues York.
“These firms must continually prove the value of their offering—whether
active or passive—and deliver on the strong, consistent investment
performance that these institutional investors expect.”

About US Institutional Investor Brandscape

Cogent Reports conducted an online survey of a representative cross
section of 599 investors with $20 million or more in institutional
investable assets from October 10 to December 2, 2013. Survey
participants were required to play a direct role in the evaluation and
selection of investments or asset managers within their organizations.
In determining the sampling frame for this study, Cogent Reports relied
upon the Standard & Poor’s Money Market Directories (MMD) database of
institutional investors. To ensure the population for this research was
representative of the universe of institutional investors, strict quotas
were established by Cogent based upon a nested classification of
institutional investor category and size of assets. Minimal weighting
was applied to adjust for purposeful deviations from the actual
marketplace distribution. The data have a margin of error of ±4% at the
95% confidence level. Market Strategies will supply the exact wording of
any survey questions upon request.

About Market Strategies International

Market
Strategies International is a market research consultancy with deep
expertise in communications, consumer/retail, energy, financial
services, healthcare and technology. The firm is ISO 20252 certified,
reflecting its commitment to providing intelligent research, designed to
the highest levels of accuracy, with meaningful results that help
companies make confident business decisions.

Market Strategies conducts qualitative and quantitative research in 75
countries, and its specialties include brand, communications, customer
experience, product development, segmentation and syndicated. Its
syndicated products, known as Cogent Reports, help clients understand
the market environment, explore industry trends and evaluate and monitor
their brand and products within the competitive landscape. Founded in
1989, Market Strategies is one of the largest market research firms in
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